Adobe Systems (ADBE): Stock With Unusual Social Activity

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Adobe Systems ( ADBE) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Adobe Systems as such a stock due to the following factors:

  • ADBE has 12x the normal benchmarked social activity for this time of the day compared to its average of 12.32 mentions/day.
  • ADBE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $159.5 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on ADBE:

Adobe Systems Incorporated is a diversified software company worldwide. It operates in three segments: Digital Media, Digital Marketing, and Print and Publishing. ADBE has a PE ratio of 127. Currently there are 8 analysts that rate Adobe Systems a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Adobe Systems has been 2.1 million shares per day over the past 30 days. Adobe Systems has a market cap of $39.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.31 and a short float of 1.2% with 2.80 days to cover. Shares are up 8.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Adobe Systems as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 10.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although ADBE's debt-to-equity ratio of 0.29 is very low, it is currently higher than that of the industry average. To add to this, ADBE has a quick ratio of 2.07, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 80.4% when compared to the same quarter one year prior, rising from $47.05 million to $84.89 million.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • ADOBE SYSTEMS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ADOBE SYSTEMS INC reported lower earnings of $0.52 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($2.09 versus $0.52).

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